AIM-listed UK-based exploration and production company Egdon Resources has reported the farm-out of an interest in Petroleum Exploration and Development Licence 180 (PEDL180) to Union Jack Oil.
The group reported that the farm-out highlighted the company's strategy of farming out assets to manage risk and accelerate activity.
Under the terms of the agreement, Egdon Resources said that Union Jack would pay 16.66% of the cost of the planned Wressle-1 exploration well to earn an 8.33% interest in PEDL180.
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If the well proves the existence of an economically developable hydrocarbon accumulation, Egdon Resources said Union Jack would also earn an 8.33% interest in the part of the field which is determined to extend into the adjoining Licence PEDL182.
As a result of the farm-out, Egdon's exposure to the Wressle-1 well cost has been reduced to 16.67%.
Mark Abbott, Managing Director of Egdon Resources, said: "We are pleased to welcome Union Jack into PEDL180 and the drilling of the Wressle Prospect. The prospect is well defined on new 3D seismic data and has the right address, being located between existing oil fields and discoveries."
He added: "This farm-out is a further example of delivering on our strategy of managing both the technical and financial risks within our overall drilling portfolio. We now look forward to commencement of drilling operations in the East Midlands in the third quarter of 2013."
Egdon currently holds interests in 29 licences in the UK and France and has an active programme of exploration, appraisal and development within its balanced portfolio of oil and gas assets.
Egdon Resources' share price was up 1.52% to 8.38p at 11:26 on Wednesday.
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